Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 271 |November 18-24, 2022
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Why Indonesia matters
The Economist | November 17, 2022
This week’s G20 meeting took place in Indonesia, the most important country that people routinely overlook. A quarter of a century on, Indonesia matters once again. It is the world’s largest Muslim-majority state, its third-biggest democracy and its fourth-most-populous country. With 276m people spread across thousands of islands that stretch from the Indian Ocean to the Pacific, it is caught up in the strategic contest between America and China. And like India and other emerging markets, it is adapting to a new world order in which globalization and Western supremacy are in retreat.
Over the next quarter-century, the country’s clout could increase spectacularly. The economy is one reason. Indonesia is the sixth-biggest emerging market by GDP, and in the past decade has grown faster than any other $1trn-plus economy bar China and India. A source of dynamism is digital services, which are helping create a more integrated consumer market, with over 100m people collectively spending $80bn a year on everything from e-payments to apps for on-demand trucking.
Another economic catalyst is Indonesia-specific. With a fifth of global reserves of nickel, used in batteries, the country is a vital link in electric-vehicle (EV) supply chains. As the West, China and India increase subsidies to attract EV investment at home, Indonesia has spotted an opportunity. Rather than seeking to be the Saudi Arabia of the green-metal age, it is pursuing a policy of “downstreaming”, banning the export of raw materials to force global firms to build factories in Indonesia. This is unorthodox, but over $20bn of investment has been secured so far. The second reason for Indonesia’s strong prospects is that it has found a way to combine democracy with economic reform. Incremental improvements include new infrastructure, the cleaning up of state firms and some modernisation of education and labour laws. Corruption is a problem, but the economy is more open than it was ten years ago. The final reason for Indonesia’s growing clout is geopolitics. Its location, size and resources make it a key theatre in the superpower contest. If Indonesia stays on this path for the next decade, the country could become one of the world’s ten biggest economies.
Inevitably, there are dangers. One is succession. Jokowi’s final term ends in 2024 and he has no obvious successor. Protectionism is another risk. The country has a long history of prickly resource nationalism. The biggest danger is that geopolitics causes Indonesia to stumble. Even on its current path, it could drift into China’s orbit.
3 key takeaways from the article
- This week’s G20 meeting took place in Indonesia, the most important country that people routinely overlook. Indonesia matters once again.
- The economy is one reason. Indonesia is the sixth-biggest emerging market by GDP, and in the past decade has grown faster than any other $1trn-plus economy bar China and India. With a fifth of global reserves of nickel, used in batteries, the country is a vital link in electric-vehicle (EV) supply chains. Indonesia’s ability to find a way to combine democracy with economic reform and its growing geopolitics clout are the other reasons for strong prospects.
- If Indonesia stays on this path for the next decade, the country could become one of the world’s ten biggest economies. Inevitably, there are dangers: no obvious successor to the current PM, protectionism and the biggest danger is that geopolitics causes Indonesia to stumble.
Topics: Globa Economy, Indonesia, China, USA
What matters most? Six priorities for CEOs in turbulent times
By Homayoun Hatami and Liz Hilton Segel | McKinsey & Company | November 17, 2022
Managing complex organizations is much harder today than it was just a few years ago. And the hardest task of all for CEOs is to decide what needs to be done now and what can wait. What matters most today? Just as they did last year, the authors have spoken with hundreds of leaders this year and found six priorities that feature prominently on CEO agendas worldwide.
Start with—what else?—resilience. No doubt, it’s a corporate buzzword, but if you strip away all the extraneous baggage that the concept has collected, resilience is emerging as a vital “muscle” for companies operating in a world of endless volatility and disruption. The pandemic asked companies to move much faster. Now inflation seems to be here for the duration, thanks in large part to depleted supply chains, especially in energy. That’s causing companies to deploy their newfound speed across all six dimensions of resilience: finance, operations, technology, organization, business model, and reputation.
A second priority centers on an old-fashioned virtue: courage. With lots of indicators flashing red, it’s tempting for business leaders to pull back a bit, postpone some initiatives, and scale back on growth plans. Tempting, but wrong (for most companies). The best leaders and companies are ambidextrous: prudent about managing the downside while courageously pursuing the upside. These leaders are thinking about the next decade, not the next month. Many are spurring their organizations to rethink opportunities and reset the strategic gameboard in light of the current volatility.
More than half of top executives consider business building a top three priority. How do they do it? They begin by setting the bar very high (think unicorns), and then they protect the new business from business as usual. The most fertile ground for new-business building is green technologies.
Building a new business inevitably means new and better technology, CEOs’ fourth priority. That’s especially true when going after new green business opportunities. It’s true for all the nontech companies that are making the shift to put software at the heart of their business. And it’s also true for all the companies seeking to get maximum value from their digital transformation. But that’s just the start; technology is always evolving, offering new opportunities to CEOs looking to transform their business.
What a difference a year makes: the road to net-zero emissions, our fifth CEO priority, has taken a most unexpected turn. Only last November at COP26 (2021 United Nations Climate Change Conference), business leaders’ pledges to target nearly 90 percent of CO2 emissions for reduction signaled that the private sector was truly engaged for the first time. Then major new headwinds began swirling—surging inflation, war in Europe, energy insecurity, and a potential global recession. These are the most serious challenges in at least a generation, many leaders have told us. But there’s some surprisingly good news: the goals of sustainability, economic competitiveness, affordability, and national security dovetail as never before. It’s up to the CEO to adapt, mitigate, and knit these concepts into a vehicle that goes from zero to net zero.
The people needed to make all the foregoing happen are never far from the minds of leading CEOs. The sixth priority we’ve heard is that leaders need to reengage employees. In recent years, the contract with workers has become a little too transactional for anyone’s liking—we pay you, you show up, see you tomorrow. In the wake (we hope) of the COVID-19 pandemic, CEOs need to find a new plan of engagement. Getting the hybrid work model right is one dimension. But a requirement to spend two days in the office, say, is going to get old really fast without some new incentives. CEOs need to think hard about the office of the future, a place where workers want to be—to see friends, riff on new ideas, and find enough meaning in their work to get them through the next week of pallid video calls.
2 key takeaways from the article
- Managing complex organizations is much harder today than it was just a few years ago. And the hardest task of all for CEOs is to decide what needs to be done now and what can wait. What matters most today?
- Just as they did last year, the authors have spoken with hundreds of leaders this year and found six priorities that feature prominently on CEO agendas worldwide. These are: start with—what else?—resilience, courage, business building, investing in new and better technology, aiming for net-zero emissions, and need to reengage employees.
Topics: Strategy, Resielence, Decision-making